NOKIA’S WORLD: Data is the future

AMSTERDAM, The Netherlands-To understand Nokia Corp.’s outlook, one must leave the United States behind. This is somewhat akin to jumping from one fish bowl to another. The view from inside the U.S. fish bowl provides only a fun-house reflection of one’s own image. The view from the fish bowl that is Nokia World-the vendor’s annual showcase, held last week in The Netherlands-is also distorted, but it magnifies a bigger world.
In that bigger world, the U.S. market appears in its global context: it is relatively small and, from Nokia’s perspective, fraught with hassles. First, it is carrier-dominated and those carriers-essentially “marketing and billing machines,” in the words of one Nokia executive-make expensive demands on handset vendors. U.S. carriers subsidize handsets in a way that obscures Nokia’s value proposition. The U.S. market continues to support CDMA, a technology that forces Nokia to deal with a San Diego-based chip maker and IP holder whose name is not mentioned here in polite company. And the U.S. represents well under 10 percent of Nokia’s global market.
Nokia’s perspective came into focus when, in a Q&A session with the press following his opening keynote address, Nokia Chief Executive Officer Olli-Pekka Kallasvuo was asked about Nokia’s plans to reassert itself in the States.
For years, Nokia has “over-invested” in research-and-development in the United States based on the market’s size, Kallasvuo said. There is “no magic bullet” for success; only “hard work and more hard work,” Nokia’s chief said. He offered a vague reassurance that Nokia would wield its “global scale and muscle” to exploit the U.S. market’s upside.
As the two-day conference ended, Keith Pardy, senior vice president of marketing at Nokia, offered a pointed bookend to Kallasvuo’s remarks:
“Walled gardens? Good luck!” Pardy said.
Nokia’s outlook unfolded over the course of two days in Amsterdam, both from its internal discipline in delivering consistent messages as well as inadvertently, as it strutted its stuff in a comfortable, Euro-centric setting.
The vendor’s essential messages-largely aimed at network operator customers in attendance-weren’t particularly important in and of themselves, but they reflected Nokia’s outlook with a clarity often obscured when viewed from inside the U.S. fish bowl. Nokia World, like Wayne’s World, was short on news and long on attitude.
So, what did Nokia feel compelled to tell its network operator customers and, via the assembled media, the rest of the world?
While Nokia still makes “mobile phones,” the future lies in its growing focus on “multimedia computers,” a semantic turn-of-phrase that assures operators that future growth will be built on data revenue rather than now-commoditized voice service. The proliferation of handset features-browsers, GPS, multimedia, etc.-that some have characterized as “Swiss Army knife” packages will interact with each other to create the “experiences” promised by purveyors of wireless technology. Those experiences are likely to be driven by social networking rather than simple delivery of corporate-driven multimedia content. And Nokia has done extensive, global consumer research that market-by-market can be leveraged by its network operator customers.
Nokia executives went so far as outlining four universal “need states”-living, achieving, exploring and connecting-that the company has discerned. (It further identified 12 specific demographic profiles it claimed would define the bulk of consumers around the world.) Message: we know who these people are, we know what they want and we can bait operators’ hooks.
Along the way, of course, these messages were underscored by murmured mantras of the phenomenal growth still ahead. Two billion people are connected by mobile communications while 4 billion are not. Less than 15 percent of the world’s population has access to the Internet, which in Nokia’s view plays to its emphasis on multimedia computing. Fifteen people every second are going mobile-ka ching!
Of course, given the high tone of the proceedings, Phil Brown, Nokia’s vice president of sales and marketing for Europe, actually apologized for using a “dirty word”-he mentioned “making money”-as he reminded his audience in a keynote address that that, after all, was the essence of business.
Lest all the rosy talk about multimedia computing raise any doubts about Nokia’s current offerings, there was sufficient mention of its music phone offerings, current and pending launches of mobile TV via DVB-H technology, picture-sharing services and more. For instance, Kallasvuo said that Nokia is the world’s largest purveyor of music phones; while technically true, perhaps, this ignored that its relatively small competitor, Sony Ericsson Mobile Communications L.P., is growing market share and revenue faster in this segment and enjoys a higher operating margin.
Meanwhile, Nokia is working to present its value proposition directly to consumers through 18 flagship stores worldwide and training sales staffs at allied, independent retailers-a well-known initiative that further cemented the impression that Nokia finds the U.S. paradigm somewhat irksome.
And as for the carriers that dominate the U.S. market, Tero Ojanpera, Nokia’s chief technology officer, said that as air-interface technologies converge in the still-mystical realm of 4G, Nokia will have effectively leap-frogged ahead to offer handheld devices that no longer require CDMA-based radios.
Though Nokia’s tagline-“connecting people”-made eminent sense in the context of Nokia World and this mantra was repeated again and again, many in the audience often appeared to have chosen to connect with someone far away rather than with the speaker on stage. Audience members often appeared to be glued to their handset screens, even as a live human stood before them, pontificating for their benefit. At least that may have pleased the network operators, for whom Nokia’s many messages were intended.